Most people will consider them petty and an endless source of bad publicity but those extra charges accounted for €663m in turnover according to its latest figures – almost 25% of Ryanair’s total revenues, The Sunday Business Post notes.
Baggage charges, in-flight sales and other “ancillary revenue” all continue to be money-spinners despite the “2% decline in average spend per passenger, primarily due to lower excess baggage revenues and the adverse impact of the euro/sterling exchange rate”, the airline said.
Chief executive Michael O’Leary wasn’t fazed by suggestions the “optional” charges were practically impossible to avoid. When asked last week how he would spend his €20m special dividend, he joked:
“About €12m gets paid in tax to the Irish government. Of the remaining, my wife will take about four and the balance will go on paying Ryanair’s check-in fees and excess baggage fees on the O’Leary family holiday.”
O’Leary may be subject to income tax on his earnings but separately, the Sunday Independent reports Ryanair is effectively paying no corporate tax despite its record €3bn sales announced last week.
The low-fares airline, the newspaper states, received a €1.5bn tax refund – more than cancelling out the €425,000 it owed in taxes at year end.
“The ‘tax refund’ of €1.5 billion refers to the normal refund of advance corporation tax paid by Ryanair in circumstances where our substantial Capital Allowances exceed our tax charge,” the airline told the Sindo.
According to “expert analysis” Ryanair used tax allowances and accountancy methods to keep its overall tax bill well below the current 12.5% corporate tax take.
“While the year to March 2009 saw the airline pay no tax, other years were almost as low,” according to the Sindo. “Annual reports reveal it had an effective tax rate of just 3.4% in 2007, with an effective tax rate of 9.4% in 2006.